In Beijing, the price of pure gold has exceeded 430 yuan(67.69 USD) per gram, but consumer enthusiasm is just as high as the gold prices.
It is still two months to go to embrace the Chinese traditional lunar Year of Dragon, however, business operators in China have been busily engaged in promoting dragon-related gold products in a hope to boost sales.
Chinese people have cultural and historical likings for gold and silver, as both ornaments and accessories. The peak season for gold sales this year coincides with the New Year holiday and the Chinese Spring Festival.
One resident told the reporter: "Chinese people share a concept. That is to buy gold when the price is climbing. Many customers buy gold accessories as presents for relatives and friends. And also it is wedding season, increasing gold demand."
"What is happening with gold is that there is a very strong demand factor, whether as a commodity, a currency or as a store of value or as a hedge," Owen Hegarty, vice chairman of Hong Kong-listed gold producer G- Resources, told Xinhua on the sideline of the Asian Commodities Investment Summit.
Investment key driver amid inflationary concerns
On the demand side, investment demand is the primary driver since 2010, followed by growing national reserve demand and demand for gold jewelry as living standards rise, according to Hegarty, who has some 40 years in the global mining industry.
The Chinese investors have rushed to buy precious metals to hedge against rising inflation, where the Consumer Price Index (CPI) shot up to 5.5 percent year-on-year in October, showing the world's second largest economy is suffering the fastest growing price in almost three years.
The benchmark interest rate of one-year deposits still stood at 3.25 percent after the central bank raised the interest rate twice this year to curb inflation.
Analysts say the continuous decline of the U.S. dollar has also stimulated investors to choose safe haven products such as gold.
Buying gold as means of investment has become more a common choice for Chinese in the past third quarter as it is viewed as a safe investment during these uncertain economic times, said the World Gold Council (WGC) in its Gold Demand Trends report for the third quarter of 2011.
Demand for gold bars and coins in China expanded by 24 percent from a year earlier in the third quarter amid safe-haven buying in 2011.
In the first nine months, total investment demand reached 204.1 tonnes, said Zheng Lianghao, managing director of the WGC's Far East division.
Meanwhile, Chinese gold jewelry demand was 13 percent higher year-on-year at 131 tonnes as retail chains expanded their networks in smaller cities to meet increasing demand fuelled by rising income levels, said Zheng.
Strong demand in investment and jewelry will drive China's total gold demand this year, according to the WGC.
And with high consumption and investment demand, gold prices will continue to rise in coming days.
Gold price still on upward trend
Gold price has rocketed from 400 dollars per ounce around May of 2003 to current 1,720 dollars after peaking at 1,900 dollars in August this year. But consumer enthusiasm hasn't been affected.
A recent drop in gold price was quick to see investors calling a new buying opportunity as the sharp drops in previous trading sessions have made the current price attractive enough for short- term traders to step in.
The gold price is basically going up as fundamental demand for gold is strong while the supply is subdued, said Hegarty.
China has a proven gold reserve of 6,327.4 tons, making it the largest gold reserve holder second only to South Africa.
China’s gold output reached 340.876 tons in 2010. Its gold output may exceed 350 tons this year, however, consumption may reach 400 tons, according to Sun Zhaoxue, the president of China National Gold Group Corp., at the China Mining Congress and Expo 2011. And with high consumption and investment demand, China's gold prices may follow the trend and continued to climb in coming months.
Source:cntv.cn